Weekly Update 12 February 2017 – LS Trader

US stocks hit new all-time highs yet again this week. The dollar has turned around its six-week period of declines and finished the week higher. Strength continues to return to the metals, and interest rate futures continue to consolidate above their recent lows.

Stocks

The S&P 500 hit new all-time highs on Thursday and Friday as the 2300 level was reached and exceeded for the first time. All of the metrics bar one are supportive of the trend. That exception is volume, which continues to print below average levels.

The Nasdaq 100 has now closed higher for six consecutive days, printing a new all-time high in each of the last four days. Volatility is expanding nicely, and the RSI has reached a bullish 74.78, although there is slight bearish divergence. As with the S&P 500, the real negative is the lack of volume fuelling the move, but prices at all-time highs are not a bearish characteristic!

European stock indexes continue to lag the US markets. The Dax is still some 750 points below its all-time high, and the FTSE 100 is just over 100 points below its high.

Commodities

Gold and Silver both continued to advance this week. Gold reached its 200-day moving average on Wednesday before pulling back, but the short-term trend is up. Silver was stronger still and did not see weakness at the end of the week. The long-term trend is still down for both of these metals, but as before, that could change over the coming weeks if we see continue strength.

Copper and Palladium have seen renewed strength this week. Palladium looks to complete the recovery from the sharp decline last month and looks set to test the local top this week. Copper has been stronger still and made a thrust breakout to new highs on almost 200% volume readings. The RSI also broke above 60 on Friday. Friday’s high was the highest print since May 2015 for Copper.

Currencies

The dollar index ended its run of six consecutive down closes and reversed higher with a bullish engulfing pattern on the weekly chart. The RSI remains in the bull range, and the long-term trend is still up for the dollar, so we may yet see new highs in the index.

Of course, we have seen the inverse price action in the Euro, where the long-term trend is still down. Here the RSI remains in the bear range and we may see price head lower towards the January 3rd low.

Interest rate futures

Interest rate futures briefly moved above their 50-day moving averages before finding resistance just below the recent highs and turning lower again. That level was also the 38.2% retracement level of the decline from the November high.

The RSI once again has been unable to break above the 60 level having tested it again this week. This price action keeps the RSI in the bear range. If those resistance levels hold in terms of the January high, Fibonacci levels and 60 on the RSI, we can expect new lows in the not too distant future.

Good trading

Phil Seaton

LS Trader

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